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US royalties stay stable – iTunes stays open

We’ll know never know if Apple was bluffing when it said it would shut down iTunes rather than pay more cash to music creators – as the US Copyright Royalty Board chose to keep royalty payments at the same level.

Apple had threatened to close iTunes if the decision went against the service, Eddy Cue, vice-president of iTunes, told the three judges – who sit on the Copyright Board board, “[Apple] is in this business to make money, and would most likely not continue to operate [iTunes] if it were no longer possible to do so profitably.”

The three judges on the panel decided to maintain the existing royalty rate of 9.1 cents per song rather than side with music publishers who wanted it raised to 15 cents or with music labels and iTunes who actually wanted to slash the cash they give songwriters and composers.

The CRB also set a payment rate of 24 cents for each song sold as a ringtone for a mobile phone and elected a 10.5 per cent mechanical royalty rate for some streaming services (a la Rhapsody to Go, etc.) Furthermore, music publishers will have the right to seek a 1.5 percent late fee, calculated monthly.

Jonathan Potter, executive director of the DiMA, which represents online music stores, said, “During this challenging time for the music industry and digital stores and services, we are pleased with the CRB’s decision to keep royalty rates stable for the next five years. Keeping rates where they are will help digital services and retailers continue to innovate and grow for the next several years, which will benefit songwriters, artists, labels and publishers.”

EMI Music Publishing Chairman and CEO Roger Faxon testified at length to the Copyright Royalty Judges on this affair. Responding to the ruling, he said: “This is a vitally important ruling that properly recognizes the intrinsic value of songs, and which ensures that songwriters will be appropriately compensated for their creative works.

“With today’s decision, and the agreement on interactive streaming and limited downloads announced last week, we now have a rates structure that will provide a solid platform from which the music marketplace can grow. That has to be a good thing for fans, songwriters and all those involved in the music business.”